Minimum Wage Act - Washington-Based Employee

ADMINISTRATIVE POLICY

STATE OF WASHINGTON
DEPARTMENT OF LABOR AND INDUSTRIES
EMPLOYMENT STANDARDS

TITLE: MINIMUM WAGE ACT - WASHINGTON-BASED EMPLOYEE
NUMBER: ES.A.13
CHAPTER: RCW 49.46, WAC 296-128
ISSUED: 5/22/2019

ADMINISTRATIVE POLICY DISCLAIMER

This policy is designed to provide general information in regard to the current opinions of the Department of Labor & Industries on the
subject matter covered. This policy is intended as a guide in the interpretation and application of the relevant statutes, regulations,
and policies, and may not be applicable to all situations. This policy does not replace applicable RCW or WAC standards. If additional
clarification is required, the Program Manager for Employment Standards should be consulted.
This document is effective as of the date of print and supersedes all previous interpretations and guidelines. Changes may occur after
the date of print due to subsequent legislation, administrative rule, or judicial proceedings. The user is encouraged to notify the
Program Manager to provide or receive updated information. This document will remain in effect until rescinded, modified, or withdrawn
by the Director or his or her designee.

1. When does this policy apply?

This policy is intended to assist in determining whether an employee is "Washington-based" for
purposes of the protections of the Washington Minimum Wage Act (MWA), RCW 49.46. The MWA
regulates employers who are doing business in Washington and who have hired Washington-
based employees. An "employee" under the MWA is defined as any individual employed by an
employer except those employees specifically excluded by the Legislature in RCW
49.46.010(3)(a) through (p). Please see Administrative Policy ES.A.1 for more information on the
definition of "employee" for purposes of the protections of the MWA.

If a worker meets the definition of "employee" under the MWA, and is "Washington-based," then
the employer must pay the employee at a rate at least equal to the minimum hourly wage
established at RCW 49.46.020, provide the employee with paid sick leave as required by RCW
49.46.210 and WAC 296-128, and pay to the employee all tips, gratuities, and service charges
due to them under RCW 49.46.020 and RCW 49.46.160. Additionally, most Washington-based
employees must be paid overtime at a rate of at least one and one-half times their regular rate of
pay for all hours worked in excess of 40 in a seven-day workweek. Please note that there are
additional exceptions to overtime, and some employees may be entitled to the state minimum
wage and paid sick leave even if overtime pay is not required. Please see RCW 49.46.130 and
administrative policy ES.A.8.1, for more information on exceptions from overtime.

2. Who is a "Washington-based" employee?

State statutes and regulations do not define "Washington-based." The Washington-based
employee standard was recognized in the 2007 Washington Supreme Court decision Bostain v.
Food Express, Inc., in which the Court held that the "MWA regulates only employers who are
doing business in Washington and who have hired Washington-based employees" (emphasis
added). 159 Wn.2d 700, 719, 153 P.3d 846 (2007). In Bostain, the employee was an interstate
truck driver who was based out of a Washington terminal, and also lived in Washington. Neither
party disputed that the employee was a Washington-based employee, and so the Court did not
conduct further analysis on this point. However, the Court recognized that whether an individual
is a "Washington-based employee will depend on factors that the courts routinely use for deciding
choice of law questions." Bostain, 159 Wn.2d at 713, n.5 (emphasis added).

3. What factors determine whether an employee is Washington-based?

To determine whether an employee is Washington-based, and therefore subject to the MWA,
Washington follows the choice of law analysis mentioned in Bostain and described in Burnside v.
Simpson Paper Company, 123 Wn.2d 93, 864 P.2d 937 (1994). This requires a two-step process
to determine what state has the most significant relationship to an employee. A conflict of law
analysis is fact-specific and must be analyzed on an employee-by-employee basis.

The first step is to determine whether there is a conflict between Washington's MWA and another
state's law. For example, if an employee is potentially subject to the overtime laws of more than
one state, but both states have the same overtime requirements, there is no conflict. If an
employee has significant ties to Washington, the department can enforce the MWA's overtime
requirements with respect to hours worked by that employee.

If the laws of the two states differ, for example, when an employee works both in a state that has
no mandatory paid sick leave and in a state (such as Washington) that has such a requirement,
then the department must determine which state has the most significant relationship to the
employee by evaluating the connections that each state has to the employee. It is important to
evaluate the number and the significance of each connection to Washington State when
performing a choice of law analysis. The department will consider, among other factors, the
following questions:

• Where was the employment agreement made?
• Does the employee live in Washington?
• Does the employer have its base of operations in Washington?
• Does the employee have his or her base of operations in Washington?
• Does the employer maintain a work site in Washington?
• If the employee leaves Washington as part of the employee's work, where does the trip begin and end?
• Does the employee receive work assignments from a location in Washington?
• Is the employee's work supervised by individuals operating from the employer's location in Washington?
• How much of the work is performed in Washington?
• How long is the contract to do work in Washington?

These factors parallel the test for when "employment" includes "an individual's entire service
performed within or without or both within and without this state" under the Family and Medical
Leave Program. See RCW 50A.04.010(7)(a). While the department will consider all the above
factors in evaluating whether an individual is a Washington-based employee, and may consider
additional factors that show a connection between the worker and Washington State, some of the
factors may be more relevant than others. For example, the department will give careful
consideration to where the work is performed.

4. What are some examples of employees that the department considers Washington-
   based?

Using a conflict of law analysis and considering the factors described above, the department
would conclude that the following individuals are Washington-based employees for the purposes
of applying the MWA provisions. The examples are intended for guidance purposes only.

Example 1

Vera, a resident of Moscow, Idaho, was hired by a cleaning service headquartered in Pullman,
Washington. Every week-day, Vera is required to report to the Pullman headquarters of her
employer to pick up supplies. Vera typically spends all of her day in Washington, but she
occasionally has a work assignment in Idaho. Vera is allowed to end her work-day in Idaho without
reporting back to Pullman if her last appointment is in Idaho.

Vera is a Washington-based employee covered by the Washington MWA.

Example 2

Jackson has worked as a technical writer for a small Vancouver, Washington, engineering firm
since 1999. Jackson is paid by the hour, and primarily creates documents to communicate
complex technical information more easily to his firm's clients. In 2018, Jackson's spouse received
a job offer from a software developer in Salt Lake City. Jackson moved to Salt Lake City with his
spouse, and continues to work for his employer's firm remotely through teleconferencing and
Internet-based technologies. Jackson's supervisor works in Vancouver and sends Jackson his
assignments and also reviews his work. Jackson is required to travel to the Vancouver office twice
a year for training on new technologies and office policies.

Jackson is a Washington-based employee covered by the Washington MWA.

Example 3

Gabriela, a Reno, Nevada, resident, applied for a job with a Washington consulting firm
headquartered in Spokane, and was offered the job in-person in Spokane. Gabriela is paid by the
hour to do graphics design work remotely for her employer, which is subsequently used by the
employer in their marketing. Gabriela is not required to physically report to the consulting firm's
Spokane headquarters, and her work can be done anywhere with Internet access. Gabriela
receives instruction and work assignments from the Spokane office only.

Gabriela is a Washington-based employee covered by the Washington MWA.

Example 4

Kelly, a resident of St. Helens, Oregon, works as a drywall installer for a company headquartered
and based in Portland, Oregon. Kelly's employer bids for construction contracts in the Portland
metropolitan area (which includes Clark and Cowlitz Counties in Washington). Kelly only works
on one contract at a time, and these contracts can last anywhere from 3 to 12 months, depending
on the complexity and size of the construction project. When Kelly is assigned to a project, he
reports directly to the construction site each morning. There is no expectation that Kelly report to
the Portland office of his employer, aside from staff meetings every three months. When assigned
to a contract in Clark or Cowlitz County, the work must be solely performed in Washington as the
buildings are to be built at specific locations in such counties.

When Kelly is working on projects in Clark or Cowlitz Counties under such circumstances, Kelly
is a Washington-based employee.

5. What are some examples of employees the department does not consider to be
   Washington-based?

Using a conflict of law analysis and considering the factors described above, the department
would conclude that the following individuals are not Washington-based employees. The
examples are intended for guidance purposes only.

Example 1

Vanessa has a home office in Coeur d'Alene, Idaho, and works as a sales representative for a
diesel manufacturer based in Everett, Washington. Vanessa's employer has no facilities in Idaho
and only operates the manufacturing plant in Everett. Vanessa's employer has sales
representatives located in every western state, and Vanessa is her employer's Idaho sales
representative. Vanessa is required to travel to businesses within the boundaries of Idaho to
promote her employer's products, and the only time she is required to travel to Washington is to
attend a once-a-year training class held in Everett. The vast majority of Vanessa's job can only
be performed in Idaho.

Vanessa is not a Washington-based employee.

Example 2

Jamie, a resident of Sheboygan, Wisconsin, works in Sheboygan for a company that is
headquartered in Seattle. Jamie applied for and received a job with the Seattle company while a
representative for the employer was touring the Sheboygan facility of the employer. Although 500
employees work in Seattle for the company, only 15 workers are employed at the Sheboygan
facility. Jamie travels from home to work in Sheboygan every week-day, and except for a few
conferences out of state each year, nearly all his work is performed at the Sheboygan facility.

Jamie is not a Washington-based employee.

Example 3

Brent is a service technician who installs and services telephone equipment for a telephone
service company. He is a resident of Oregon who interviewed at the company's headquarters in
Vancouver, Washington. More than 70% of his work is in Oregon with the remainder in Clark
County, Washington. The company has a service location in suburbs of Portland, which Brent
visits to pick up supplies and to turn in timekeeping and other employment paperwork, but he is
usually dispatched from his house in Portland. He receives his assignments from customer
service representatives who work at the company's main office in Vancouver. Other than securing
the job in Washington, and receiving dispatch calls from Washington, the vast majority of Brent's
work is performed in Oregon.

Brent is not a Washington-based employee.

Example 4

Vergel, a resident of Walla Walla, Washington, was hired by a wine-bottling company
headquartered in Milton-Freewater, Oregon. Every week-day morning, Vergel reports to the
Milton-Freewater headquarters of his employer to receive work assignments to various vineyards
in Oregon and Washington. Vergel typically spends all of his day in Oregon, but occasionally
performs on-site visits to vineyards in Washington. Vergel is allowed to end his work-day in
Washington without reporting back to Milton-Freewater if his last appointment is in Washington.

Vergel is not a Washington-based employee.